Hedge Fund Cloning to “Turn Industry Upside Down”
| Nov 23rd, 2006 | Filed under: Alternative Beta & Hedge Fund Replication | By: Alpha Male |
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International hedge fund celebrity, Lars Jaegar (see research) told Dailyii on Tuesday that hedge fund cloning could have a “dramatic effect” on the industry. He went on to say ”This is going to turn the industry upside down”.
MIT’s Andrew Lo (see research) agrees, telling FT his cloning process aims “to threaten existing hedge funds that disguise beta as alpha.”
We agree, but would extend this reasoning to the world of long-only investing (e.g. mutual funds), where disguising beta as alpha has been the norm for some time (see research on index-hugging by mutual funds).
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